This year’s AWS Summits are more than a little different. Despite being virtual due to the COVID-19 pandemic, AWS is packing these events with lots of content. I’ve had a great time attending virtually, trying out hands-on labs, and sitting in on the technical sessions. As I work primarily with cost management and optimization for cloud compute services, this has been my main interest in attending the conferences. Here are my main takeaways around better managing your AWS cloud costs.
Cost optimization for cloud is defined by AWS as delivering business value at the lowest possible price. AWS equally emphasizes cost prudency and delivering performant business services. AWS cloud services have empowered organizations to innovate faster, become more agile, and go to market sooner to serve their customers. As organizations execute on their cloud strategies, it is important that every employee understands how these corporate goals are tied to cost management practices to deliver more with less.
As the leading public cloud pioneer, AWS has helped many customers make the transition to the cloud. Each customer implementation has helped contributed to and generate a set of best practices and guidelines, which is summarized in the AWS Well-Architected Framework. Their Well-Architected Framework whitepaper is highly regarded as a blueprint for anyone designing any solution in AWS. It comprises of five main pillars, each with principles and component best practices:
So, what does the Cost Optimization pillar of the Well-Architected framework entail? Think of an organization that is considering implementing security or operations best practices in AWS. To design these solutions, cloud architects will build upon a methodology with consistent practices, conduct iterative review processes, and implement incremental technology improvements. Similarly, when designing for costs, architects must also establish consistent practices (such as tagging), implement guardrails and process to prevent runaway costs, and make incremental improvements that help reduce operating expenses in the AWS cloud.
Consider how your organization is structured to manage Security incidents. Most likely, there is a dedicated Security Team that oversees all security details, evangelizes best practices, and establishes an incident response plan. Similarly, there is also an Operations Team that is responsible for ensuring all systems are online, implementing service improvements, and rolling out deployments.
Does your organization have of a Cost Optimization Team? AWS recommends organizations embrace a cultural shift to align with how they operate in the cloud. From top down, management needs to communicate that cost optimization is not a one-person or one-time activity; it is ongoing process and it is part of everyone’s job.
The most successful organizations have built a cross-functional team of experts—a Cloud Center of Excellence. This team’s mandate is to help an organization execute on their cloud vision and strategy, while also evangelizing best practices, building guardrails, and architecting for cost.
Organizations looking to reduce their AWS costs should stop focusing so much energy on their cloud bill, and instead take a moment to understand the context around services costs. For example, if your cloud bill increased by 10% but your product demand increased by 400%, would you be as concerned?
Densify often interacts with organizations that have invested heavily in expensive cloud bill readers, which enable them to create fancy chargeback reports and invoices, but fail to get to the root of the matter—cloud cost reduction—because they do not contextualize the costs.
Within every organization, each team has their own individual KPIs, and these influence their decision-making processes. Most often, these KPIs include external factors such as uptime, concurrent connections, and latency. However, they often exclude the cost or price of operating in the cloud. Organizations that are looking to make cost optimization part of their DNA accomplish this by including cost optimization as a KPI.
I have personally seen organizations gamify cost optimization to motivate teams to make wiser choices—resulting in increased efficiency and minimizing cloud spend at the same time.
Do not let fixation on kicking off your cost optimization practice with a big bang and focus on large savings opportunities derail your organization from immediate success. Optimizations that drive the biggest cloud budget savings often require heavy effort and encounter resistance. Therefore, channel your energy towards quick cost optimization wins. These low-hanging fruit activities can fuel the momentum of cost optimization initiatives within your organization.
For example, work on terminating idle cloud instances before focusing on instance downsizing. Idle instances require no backups or additional instance configuration efforts, and can be quickly shut down to reclaim spend and create positive momentum. This will also enable your team to understand the level of effort required to implement basic cost optimization changes within your organization, as well as begin to show the positive impact of cost optimization practices. Then with each iteration you can incremental improvements and advance your Cost Optimization journey.
AWS remains dedicated to delivering the best customer experience in cloud. Over the years, they have announced various pricing enhancements, and most recently, AWS rolled out Savings Plans. If you are new to AWS, then Reserved Instances and Savings Plans offer some of the best discounts over On-Demand pricing—up to 72%. The only drawback is that they come at the price of commitments of 1 or 3 years. In cases where you have steady-state Amazon EC2 compute workloads, the best cost optimization strategy involves purchasing Reserved Instances and Savings Plans.
Savings Plans discounts are first applied to the account that they are purchased in. Once the Savings Plans benefit and discount are fully consumed by the purchasing account, it is made available to the rest of the organization for use. Therefore, one of the most prudent things you can do is purchase Savings Plans in an account with no usage, such as your organization's AWS master account or another dedicated account solely used for purchasing. This way, AWS rolls the discounts up from your Savings Plans and distributes them across the organization to generate the maximum discount opportunity.
Selecting the correct Reserved Instances and Savings Plans is a bit of an art. It requires careful consideration of your current utilization and target coverage. And this is where Densify machine learning helps navigate the complex decision making process required to select the optimal Reserved Instance or Savings Plans to reduce spend. You can consult with our Cloud Advisor team to get a better understanding of how Densify can specifically enhance your organization’s AWS purchasing strategy.